AUD/USD stays pressured towards 0.7100 on jittery markets, mixed Aussie data

• AUD/USD extends pullback from weekly top as Australia data flash mixed signals, sentiment sours.
• Australia Trade Balance eased, Building Permits rally in December, Q4 NAB Business Confidence jump as well.
• RBA’s Lowe sounds too cautious, Aussie Trade Balance, NAB Business Confidence
• US ADP Employment Change offered negative surprise to markets, Fed Nominees highlight inflation fears.

AUD/USD extends pullback from the weekly top, down 0.30% on a day while refreshing intraday low to 0.7115 during Thursday’s Asian session.  In doing so, the Aussie pair justifies its risk-barometer status amid cautious markets, other than being weighed by the mixed data at home.

Australia Trade Balance for December eased below 9423M to 8356M as Exports and Imports both decline to 1.0% and 5.0% versus 2.0% and 6.0% respective priors. However, Aussie Building Permits jumped to 8.2% MoM during the stated month against -1.0% market forecast and +3.6% previous readouts. Additionally, the National Australia Bank’s (NAB) Business Confidence also rallied to +18, beyond -10 market consensus and -1 prior.

Other than the mixed data, the market’s inflation fears, recently highlighted by US President Biden’s all three Nominees for the Fed Board, also challenge the risk appetite and drag the AUD/USD prices. It’s worth noting that the European Central Bank (ECB) and the Bank of England (BOE) are both up for portraying a battle with the high inflation during today’s monetary policy meeting.

On Wednesday, AUD/USD prices initially cheered the softer US dollar to refresh weekly top before easing from 0.7159. The pullback moves could be linked to comments from RBA Governor Philip Lowe and a surprise negative from the US ADP Employment Change for January, -301K versus +207K expected.

That said, RBA’s Lowe repeated the rate statement published the previous day while rejecting inflation fears and highlighting an opportunity to take the Unemployment Rate down by stretching easy money policies, despite favoring an end to the Quantitative Easing (QE).

Amid these plays, the US Treasury yields remain sluggish for the third consecutive week while S&P 500 Futures drop 1.0% at the latest. Also portraying the risk-off mood are the downbeat prices of gold and WTI crude oil. However, the US Dollar Index (DXY) struggles to cheer the sour sentiment as markets shift focus from the hawkish Fed concerns.

Having witnessed the initial market reaction to the Aussie data, AUD/USD traders will pay attention to the major risk catalysts, namely central banks and headlines from Russia for a better view. Also important to watch will be the US ISM Services PMI for January, expected 59.5 versus 62.0 prior.

Technical analysis

Although the 50-DMA level surrounding 0.7165 challenges AUD/USD buyers near the weekly top, the previous support line from January 13, close to 0.7100 by the press time, restricts the bear’s entry.